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UTI rules out NAV pricing of US-64 till December

Rakesh P Sharma

Unit Scheme-64 (US-64), the flagship scheme of Unit Trust of India, will continue with its present mechanism of selling units through a monthly sale and repurchase price till the end of December 2001, a top official said.

The Deepak Parekh Committee of experts, set up in 1998 to suggest measures to revamp the scheme, had set a deadline of March 2002 for UTI to shift the pricing mechanism of flagship scheme on a realistic basis to reflect the true value of units.

MM Kapur, executive director and the fund manger for the US-64 scheme said,"We have no intention to shift to net asset value till the end of current calendar year as the investors need to be educated through our marketing agencies and financial centres so that the shift over from administered price mechanism to net asset value is smooth."

Kapur also added, "It is our objective to make the new price mechanism in such a manner that the volatility in pricing is minimised till the next calendar year."

Apparently, in terms of mobilisation, US-64, the biggest fund in the country, has put an excellent performance in the first nine months ended March 2001. It has registered fresh sales of Rs 25.50 billion with more than 265,000 new holders joining the scheme. The scheme has registered a 10.5 per cent rise in income or Rs 16.50 billion on its increased capital of Rs 155 billion.

Even as other equity funds are bearing the brunt of volatile equity markets in the form of eroding net asset values and redemptions, US-64 has been spared as investors still perceive it to be an income oriented scheme given its uninterrupted dividend track record.

Commenting on US-64 upward price revision of US-64 when the market had crashed, Kapoor added, " The basic structure of the scheme is income oriented and hence the dividend component is build up in the price." On the issue whether US-64's reserve have dipped in the current turmoil, Kapur added, "There has been no fall in our reserves till the end of March 31, 2001."

Significantly, US-64 has completely revamped its portfolio towards growth stocks in the last three years.

Petrochem and refinery sector now accounts for 31.11 per cent (15.52 per cent in June 1998), infotech and media accounts for 11.10 per cent (1.21 per cent), fast moving consumer goods for 9.90 per cent (4.19 per cent).

The fund currently has 66 per cent exposure in equity and 34 per cent in debt market instruments. UTI has committed to bring down its equity exposure to 60 per cent by June 2001.

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